Last minute bargain hunting appears to be sweeping Wall Street this morning, as U.S. stock futures are trending broadly higher. Investors are even overlooking plummeting crude prices, with the front-month oil contract down more than 1.6% this morning at levels not seen since 2004.
At last check, U.S. stock futures on the Dow Jones Industrial Average were up 0.74%, with S&P 500 futures adding 0.85% and Nasdaq Composite futures up 0.88%.
Options activity was brisk on Friday, with volume once again topping out well above average for the past month. Puts remained in the driver seat, with the CBOE single-session equity put-call volume ratio arriving at 0.77, dragging the 10-day moving average higher to 0.74.
In equity options activity, Facebook Inc (NASDAQ:FB) saw call volume continue to decline despite bullish notes from BofA Merrill Lynch and JMP Securities. Meanwhile, Teck Resources Ltd (NYSE:TCK) saw option volume come out of nowhere following a bullish write-up in The Motley Fool and news that the company is pioneering LNG as a fuel source in haul trucks in Canada.
Finally, Walt Disney Co (NYSE:DIS) has attracted quite a bit of volatility in the options pits despite Star Wars: The Force Awakens setting box-office records in its opening weekend.
Facebook Inc (FB)
FB stock continues to draw bullish commentary from the analyst community. On Friday, analysts at BofA Merrill Lynch reiterated FB stock with a “buy” rating while lifting their price target to $130 from $125 per share. Additionally, JMP Securities reaffirmed its “outperform” rating and $130 price target for FB stock. Both firms cited strong user interaction, while JMP noted that Instagram would be a key revenue driver for Facebook in 2016.
Options volume was well above normal for FB stock on Friday. Overall, some 796,300 contracts changed hands. Call volume came in below average, however, accounting for only 58% of FB’s total option volume on Friday, down from an average of 65%.
Turning to weekly Dec. 24 series open interest, FB could have trouble making headway this week. Specifically, FB stock is staring up at several levels of heavy call OI, with 5,702 contracts at the $105 strike, 8,496 contracts at the $106 strike and 5,970 call contracts at the $107 strike.
Meanwhile, potential put support is comparatively thin, with FB likely needing to rely on technical support at $100 for any ballast on a decline this week.
Teck Resources Ltd (TCK)
Teck Resources came out of nowhere on the options pits Friday. The stock received a rather bullish write-up in The Motley Fool over the weekend, but the likely driver for Friday’s spike in option volume was a report that the company was pioneering LNG as a fuel source for haul trucks at a mine in Canada.
Overall, volume came in at a short-term record 623,322 contracts for TCK stock. Activity was split near evenly between puts and calls on the session.
Looking ahead to the front-month January 2016 contract, peak OI for the series totals 49,681 contracts at the deep out-of-the-money $9 strike, while 27,145 contracts at the $5 strike are a bit closer to home, but still well out of the money. Peak put OI of 35,295 contracts is currently solidly in the money at the Jan $5 strike.
Walt Disney Co (DIS)
DIS stock traders have quite the dilemma on their hands at the moment: On one hand, Disney’s ESPN unit is hemorrhaging subscribers at an alarming pace; on the other hand, Star Wars: The Force Awakens (which is amazing, by the way!) took in a record $57 million on opening night and is poised to continue to set box-office records.
Analysts at BTIG Research projected that the new Star Wars movie will rake in $2.6 billion worldwide, but still cut their rating on DIS stock to “sell” from “neutral” on the company’s ESPN issues.
In options activity, DIS saw volume soar to 428,344 contracts on Friday, with calls edging out puts with 54% of the day’s take. Checking in on weekly Dec. 24 series OI, call traders have zeroed in on the $114 strike, with 6,334 contracts currently open.
Meanwhile, peak put OI totals 2,578 contracts at the out-of-the-money $105 strike. DIS could be in trouble this week if it is unable to reclaim support at $110 and its 200-day moving average.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
